Comments on: How Much Is 10% aka Do You Know What You Are Being Paid http://www.keithbond.co.uk/how-much-is-10-aka-do-you-know-what-you-are-being-paid/ UK Affiliate Marketing Wed, 25 Jan 2012 23:34:59 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: John C http://www.keithbond.co.uk/how-much-is-10-aka-do-you-know-what-you-are-being-paid/comment-page-1/#comment-1021 John C Mon, 14 Apr 2008 08:29:17 +0000 http://www.keithbond.co.uk/how-much-is-10-aka-do-you-know-what-you-are-being-paid/#comment-1021 It's even harder with amazon as books are VAT exclusive but other stuff isn't. By the way £100 (vat inc) = £85.11 (vat exc). £100 / 1.175 = £85.11 Cheers John It’s even harder with amazon as books are VAT exclusive but other stuff isn’t.

By the way £100 (vat inc) = £85.11 (vat exc).

£100 / 1.175 = £85.11

Cheers

John

]]> By: Richard http://www.keithbond.co.uk/how-much-is-10-aka-do-you-know-what-you-are-being-paid/comment-page-1/#comment-1018 Richard Sun, 13 Apr 2008 22:49:50 +0000 http://www.keithbond.co.uk/how-much-is-10-aka-do-you-know-what-you-are-being-paid/#comment-1018 LoveHoney pays a %age of the amount spent on goods. I think that's easiest to understand - even if it means we're paying affiliates a %age of the VAT we've collected to give to Gordon Brown. BTW, the calculation in your third example is wrong. You have worked out the VAT the wrong way round - VAT (Value *Added* Tax) is calculated by adding 17.5% to what the merchant charges. This is not the same as working backwards by calculating 17.5% of what the customer pays. If £100 is spent by the customer, the VAT element is not £17.50. Here is the sum you need to do: Find the original amount that 17.5% was added on to in order to get to £100: X + (17.5% of X) = £100 So in your example of £100 spend, X=£85.10 and the VAT paid to Gordon Brown is £14.90. So the affiliate would get 10% of £85.10 = £8.51 If the affiliate is paid 10% of £100 spend inclusive of VAT, the effective commission rate on money earned by the merchant is 11.75%. Which is nice. If the customer had spent £117.50, the VAT element would be £17.50. Important to get these sums right if you're calculating which merchant offers you the best deal! LoveHoney pays a %age of the amount spent on goods.

I think that’s easiest to understand – even if it means we’re paying affiliates a %age of the VAT we’ve collected to give to Gordon Brown.

BTW, the calculation in your third example is wrong. You have worked out the VAT the wrong way round – VAT (Value *Added* Tax) is calculated by adding 17.5% to what the merchant charges. This is not the same as working backwards by calculating 17.5% of what the customer pays.

If £100 is spent by the customer, the VAT element is not £17.50.

Here is the sum you need to do:

Find the original amount that 17.5% was added on to in order to get to £100:

X + (17.5% of X) = £100

So in your example of £100 spend, X=£85.10 and the VAT paid to Gordon Brown is £14.90.

So the affiliate would get 10% of £85.10 = £8.51

If the affiliate is paid 10% of £100 spend inclusive of VAT, the effective commission rate on money earned by the merchant is 11.75%. Which is nice.

If the customer had spent £117.50, the VAT element would be £17.50.

Important to get these sums right if you’re calculating which merchant offers you the best deal!

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